BUS 311: Business Law
7 Jul 2014
Upon the decision to start a new business, one must ask the question of what type of business entity they intend to initiate. According to Rodgers, Author of the book Essentials of Business Law, “One of the most fundamental decisions all businesspersons face in starting a business is how that business will be organized,” (2012). There are several deferent business entities to choose from. The business owner would have to weigh the different possibilities and factors such as taxes and liability to find which entity fits their intentions best. Most new small businesses options come down to a sole proprietorship, a ...view middle of the document...
Once an available name is decided on, next is to register the name either as a frictions or assumed business name. Also it is highly encouraged to register the business trademark or service mark if the intention is to do business and national or regional levels.
* Prepare Organizational Paperwork
* This step is intended for partnerships LLCs, and corporations as partners will need to form a partnership agreement, LLC members will need to create articles of organization, and corporate shareholders need to fill out articles of incorporation. Sole proprietors on the other hand can skip this step.
* Find a Business Location
* For new businesses, businesses are either started from home or commercial space. If starting from home the owner needs to look into insurance as their homeowners insurance may not cover the business. They will also need to look into their lease and homeowner restriction and zoning ordinance for that specific area. If planning on acquiring commercial space the owner needs to consider the business’s needs, such availability, parking, etc. and negotiate the lease.
* File License and Permits
* The owner will have to complete general business registration requirements along with obtaining a business license from the municipality, an employer identification number from the IRS if the business intends to hire employees, a seller’s permit from the state, a zoning permit from local planning board and other miscellanies licenses and permits such as for handing food.
* Obtain Insurance
* This is not a requirement but is highly recommended to cover the company’s assets.
* Set-Up Tax Reporting and Accounting
* Formulate a good record keeping system, and become familiar with how to write off expenses and asset purchases to aid in reporting the company’s income at the end of the year. The company must decide whether it will use cash or accrual accounting, calendar verses fiscal year and bookkeeper verses software.
* Hire Workers
* There are numerous actions that must be taken to ensure that the employees and the business are safe and operating legally. First off find the right employees, make unemployment tax payments, and organize for withholding and payroll taxes from each employee paycheck. More importantly, make sure to be in compliance with government regulations and adhere to the requirements of the departments such as OSHA, and the Department of Labor.
“A sole proprietorship is a business structure that applies when an individual is the only owner of an unincorporated business,” (Crelin, 2013). The owner and the business are considered the same entity and as such the owner may claim all the profit and is responsible for all liabilities incurred by the business. According to the Small Business Administration, in order to start a sole proprietorship the owner is not required to take any formal action but need to obtain the necessary licenses and permits (2014). This entity has the...